Sincerity is a tough thing to measure. Doubly so in the corporate world. But as an investor, when I spot a CEO who is sincerely more interested in creating lasting value than meeting the next quarter's earnings estimates, I take notice.
I think you can see that kind of sincerity in Shopify's (NYSE:SHOP) founder and CEO, Tobias Lutke. In 2004, Lutke was a 20-something entrepreneur trying to start a snowboarding business in Canada. When he tried to find a platform for selling his snowboards online, he was woefully underwhelmed.
Instead of giving up, he decided to create his own e-commerce platform. It was that experimentation which eventually became today's Shopify: a single platform for any company to create an online presence to sell its products.
While there's obviously more to evaluating a company than just looking at quotes from the CEO, I don't think we should ignore such sentiments either. Below are three key quotes that helped influence me to recently buy shares.
This is a purpose-driven company
On the company's investor relations webpage, Lutke has a no nonsense message for anyone interested in owning shares:
"Something that potential investors must understand: we do not chase revenue as the primary driver of our business. Shopify has been about empowering merchants since it was founded, and we have always prioritized long-term value over short- term revenue opportunities. We don't see this changing."
As a long-term investor, this is absolutely the most important type of thinking that I look for. Take a look at the greatest technology companies of our time -- namely Alphabet, Facebook, Amazon.com, and Tesla.
Dig a little deeper and you'll see companies that -- while not completely ignoring the bottom line -- made their decisions primarily based on the long-term arc that they were hoping to accomplish. Often, that long-term arc had nothing to do with profit, and everything to do with creating value, whether it be organizing the world's information (Alphabet), connecting the world (Facebook), creating the greatest customer-service company ever (Amazon), or accelerating the transition to sustainable energy (Tesla). With Shopify, the goal is to make e-commerce easier, particularly for merchants. Understand that and you'll understand what you're buying.
Lutke cares about culture, not personal fortune
When the company filed its most recent annual report, Lutke owned 10 million shares of Shopify. At today's prices, that equates to over $500 million. But Lutke himself is fairly aloof when it comes to his stake.
After going public, a Canadian newspaper asked him what it was like to become an overnight millionaire. Taken at his word, the response was refreshing:
"Literally the only time in the last year where I've thought about this is when I read The Globe and Mail, talking about my net worth. It is not something that motivates me, so I don't particularly care about money. I care about working on interesting problems, and Shopify is this gift that keeps on giving for working on interesting problems with amazing people. That's really what I'm preoccupied with."
This is more than just lip service. Working on interesting problems with amazing people really is part of the company's culture. As evidence of this, have one look at the company's Glassdoor ratings, which are some of the highest I've ever seen.
Some investors don't like that structure, as it gives the CEO undue sway. Others, myself included, love it. Such a class structure allows the company to stay firmly focused on the long-term. It also guarantees that corporate raiders won't come in and ruin a great thing.
He has an uber-long vision
But by far the most insightful quote I've seen from Lutke comes from his humility in trying to figure out how his company can still be a force for good 100 years from now.
"I work under the assumption that we have no idea how to build companies yet, and that 50 years from now people will look back at the companies of today and they will seem like the black-and-white footage of the first hockey games. We have no idea how to build the best companies yet."
Again, if you think this is just lip service, visit the company's webpage and you'll see an entire section devoted to such a goal.
Does all of this mean that you should run out and buy shares immediately? Hardly. There are other things to investigate. But after delving into the company's formidable moat, I'm confident that this will be a good investment. That's why I recently made a large purchase, and I think others with a similar long-term time frame should as well.